Section B – TWO questions ONLY to be attempted
iCompute was founded twenty years ago by the technology entrepreneur, Ron Yeates. It initially specialised in building bespoke computer software for the financial services industry. However, it has expanded into other specialised areas and it is currently the third largest software house in the country, employing 400 people. It still specialises in bespoke software, although 20% of its income now comes from the sales of a software package designed specifically for car insurance.
The company has grown based on a ‘work hard, play hard work ethic’ and this still remains. Employees are expected to work long hours and to take part in social activities after work. Revenues have continued to increase over the last few years, but the firm has had difficulty in recruiting and retaining staff. Approximately one-third of all employees leave within their first year of employment at the company. The company appears to experience particular difficulty in recruiting and retaining female staff, with 50% of female staff leaving within 12 months of joining the company. Only about 20% of the employees are female and they work mainly in marketing and human resources.
The company is currently in dispute with two of its customers who claim that its bespoke software did not fit the agreed requirements. iCompute currently outsources all its legal advice problems to a law firm that specialises in computer contracts and legislation. However, the importance of legal advice has led to iCompute considering the establishment of an internal legal team, responsible for advising on contracts, disputes and employment legislation.
The support of bespoke solutions and the car insurance software package was also outsourced a year ago to a third party. Although support had been traditionally handled in-house, it was unpopular with staff. One of the senior managers responsible for the outsourcing decision claimed that support calls were ‘increasingly varied and complex, reflecting incompetent end users, too lazy to read user guides.’ However, the outsourcing of support has not proved popular with iCompute’s customers and a number of significant complaints have been made about the service given to end users. The company is currently reviewing whether the software support process should be brought back in-house.
The company is still regarded as a technology leader in the market place, although the presence of so many technically gifted employees within the company often creates uncertainty about the most appropriate technology to adopt for a solution. One manager commented that ‘we have often adopted, or are about to adopt, a technology or solution when one of our software developers will ask if we have considered some newly released technology. We usually admit we haven’t and so we re-open the adoption process. We seem to be in a state of constant technical paralysis.’
Although Ron Yeates retired five years ago, many of the software developers recruited by him are still with the company. Some of these have become operational managers, employed to manage teams of software developers on internal and external projects. Subba Kendo is one of the managers who originally joined the company as a trainee programmer. ‘I moved into management because I needed to earn more money. There is a limit to what you can earn here as a software developer. However, I still keep up to date with programming though, and I am a goalkeeper for one of the company’s five-a-side football teams. I am still one of the boys.’
However, many of the software developers are sceptical about their managers. One commented that ‘they are technologically years out of date. Some will insist on writing programs and producing code, but we take it out again as soon as we can and replace it with something we have written. Not only are they poor programmers, they are poor managers and don’t really know how to motivate us.’ Although revenues have increased, profits have fallen. This is also blamed on the managers. ‘There is always an element of ambiguity in specifying customers’ requirements. In the past, Ron Yeates would debate responsibility for requirements changes with the customer. However, we now seem to do all amendments for free. The customer is right even when we know he isn’t. No wonder margins are falling. The managers are not firm enough with customers.’
The software developers are also angry that an in-house project has been initiated to produce a system for recording time spent on tasks and projects. Some of the justification for this is that a few of the projects are on a ‘time and materials’ basis and a time recording system would permit accurate and prompt invoicing. However, the other justification for the project is that it will improve the estimation of ‘fixed-price’ contracts. It will provide statistical information derived from previous projects to assist account managers preparing estimates to produce quotes for bidding for new bespoke development contracts.
Vikram Soleski, one of the current software developers, commented that ‘managers do not even have up-to-date mobile phones, probably because they don’t know how to use them. We (software developers) always have the latest gadgets long before they are acquired by managers. But I like working here, we have a good social scene and after working long hours we socialise together, often playing computer games well into the early hours of the morning. It’s a great life if you don’t weaken!’
Required:
(a) Analyse the culture of iCompute, and assess the implications of your analysis for the company’s future performance. (13 marks)
(b) iCompute is currently re-considering three high level processes:
(i) Advice on legal issues (currently outsourced)
(ii) Software support (currently outsourced)
(iii) Time recording (in-house, bespoke software development)
Evaluate, using an appropriate framework or model, the suitability of iCompute’s current approach to EACH of these high level processes. (12 marks)